Improve competitiveness of local parts suppliers, Toyota urges government

MANILA, Philippines - Toyota Motor Philippines Corp. (TMP) together with locators of the Toyota Special Economic Zone (TSEZ) appealed yesterday to the government to improve the competitiveness of local parts suppliers.

During their biannual meeting with the Philippine Economic Zone Authority (PEZA) headed by director general Lilia De Lima, exporters requested the government to revive the Export Support Fund (ESF), while the Toyota Group appealed to help reinforce the competitiveness of the auto industry, especially the local parts suppliers.

TMP president Michinobu Sugata reported that while the medium-term prospects for the auto industry is promising, locally-produced vehicles will face additional threat from imported vehicles, especially with tariff concessions under the ASEAN-Korea and ASEAN-China Free Trade Agreements beginning 2012.

“The increasing cost competition between parts suppliers in the region also threatens the position of the Philippines as an automotive parts production base. At present, the risk of losing business to strong production bases like Thailand and Indonesia is very high,” Sugata said.

He further said that the Philippines can potentially lose a significant portion of automotive export sales if parts manufacturing will not be supported. With parts and components export accounting for 95 percent of total auto export sales, supply base reduction will definitely affect the auto export base.  

Given this scenario, the Toyota Group calls for the government to develop a special program for parts exports, similar to what has been done for exports of completely built-up units (CBU).

“Recent events brought upon us challenges that have temporarily, but significantly, affected our business conditions. The automotive industry was one of the most affected in the aftermath of the Great Eastern Japan Earthquake. Nevertheless, we are optimistic that the industry will experience noticeable recovery by the second half of 2011,” he said.

“This is a positive sign that the auto industry may be able to respond to the high potential growth in industry sales beginning 2013, the projected start of motorization in the Philippines. However, the industry will only be able to take advantage of this opportunity with a competitive production base,” he added.

For its part, PEZA chief De Lima affirmed her support. “Rest assured I shall continue to give my full support to the retention and enhancement of the local automotive manufacturing industry. Your presence here in the Philippines significantly contributes to both economic and community development,” De Lima said.

“Your investments have provided employment to Filipinos, brought increased revenues for the government, enabled technology transfer, and contributed to community development through your corporate social responsibility (CSR) programs. In fact, these CSR activities would not have been possible without Toyota’s operation in the Philippines,” she explained.